Moody's Japan K.K. said March 30 that the deteriorating assetquality of Mitsubishi UFJ FinancialGroup Inc.'s overseas loans may place pressure on its stand-alone creditworthiness.

The Japanese banking group's expanding overseas portfolio isshowing early signs of deterioration, raising the risk that the company may sufferlower overseas profits due to rising credit costs, said Raymond Spencer, a seniorvice president at the rating agency.

The situation also calls into question Mitsubishi UFJ Financial'sability to sustain its pace of internal capital generation to support overseas expansion,Spencer said, noting that the rating agency views the group's capitalization asa relative weakness when assessing its stand-alone creditworthiness.

The rating agency said it expects the substantial growth in MitsubishiUFJ Financial's overseas risk-monitored loans to continue. The group's focus onextending loans overseas to people as well as small and medium-sized enterpriseswill also increase its risk profile, it added.